Triad Round Table September 2013
New core industries are shaping the Triad’s future while relying on its
current strengths: location, education, skilled workers and manufacturing.
Jeff Lindsay, president of Novant Health Forsyth Medical Center in Winston-Salem and chief operating officer of Novant Health in the greater Winston-Salem, Triangle and coastal regions; Brad Newkirk, Triad regional managing partner of Charlotte-based Dixon Hughes Goodman LLP; David Powell, president and CEO of Greensboro-based Piedmont Triad Partnership; and Jim Phillips, a partner with Greensboro-based law firm Brooks, Pierce, McLendon, Humphrey & Leonard LLP. The round table was sponsored and hosted by Dixon Hughes Goodman, with support from Novant Health, Piedmont Triad and UNC Greensboro. Peter Anderson, BNC special projects editor, moderated the discussion. The following transcript has been edited for brevity and clarity.
How does the Triad compare with other regions of the state?
Powell: It is lagging behind. Approximately net 90,000 jobs have been
lost the past 10 to 12 years. That is like every company in downtown Charlotte closing their doors or Research Triangle Park, which has about 45,000 employees, shutting down twice. But there has been net job growth the past couple of years. Advanced manufacturing is seeing growth, and the aviation sector is a bright spot.
Is there still a place for the region’s traditional industries?
Phillips: Textile, furniture and tobacco were the mainstays when I grew up in Lexington. We’ve seen a comeback to some extent. Ashley Furniture Industries Inc. recently built
a manufacturing plant and distribution center near Advance, and Greensboro-based Lorillard Inc. and Winston-
Salem-based R.J. Reynolds Tobacco Co. are still active.
Powell: These industries are still significant contributors to the economy. Manufacturers today have to apply new technologies, compete globally and have access to a skilled workforce to be successful. The companies that are still here have made that transition. Glen Raven Inc., based in Alamance County, is a global textile company that is doing as well as it ever has.
Brady: Glen Raven is a founding member of our Nanomanufacturing Innovation Consortium, organized to increase use of UNC Greensboro and N.C. A&T State University’s Joint School of Nanoscience and Nanoengineering. As one of my former colleagues at N.C. State University said, the future is in high-end textiles.
How is the Triad changing?
Phillips: I graduated from law school in 1984 and decided to stay in North Carolina. I looked at Raleigh, Charlotte, Winston-Salem and Greensboro. At that time, I wouldn’t have given $10 for the difference between them. All four had three tall buildings — one said NCNB, one said Wachovia, and one said First Union. But now the tide is turning because, while the historic industries are going to play a part in the region’s future, the core industries are different.
Lindsay: The emergence of biotechnology, health-care and human services and higher education as the core components of the region’s economy creates new opportunities.
Powell: Just as the Triangle leveraged biotechnology, the Triad can use nanotechnology. It manipulates materials at the molecular level to create new products. It crosses industry sectors, including health care, aviation and manufacturing. It’s now an important driver to our economy.
How does the region capitalize on its wealth of colleges and universities?
Hayes: There are partnerships between the universities to meet the needs of companies, and the community-college system has become the entity that recruits and trains the workforce.
Newkirk: Our education system is much more than traditional four-year schools. Our technical schools, which are important in workforce training for advanced manufacturing, are phenomenal. There are more than 100,000 students who are in some level of post-secondary education in the Triad. That population is a mix of workers being trained for new jobs and first-time students.
Lindsay: The health-care industry relies on a diverse group of well-trained professionals, so it’s fortunate to have a variety of programs from UNC Greensboro, Forsyth Technical Community College, Winston-Salem State and Wake Forest University to provide the needed workforce.
Brady: The future downtown Greensboro campus, a project that includes UNCG and Guilford Technical Community College, is an example of higher-education institutions united. It will offer a variety of health-care programs at one location that will feature a high-tech simulation lab. The university needs to continue its relationships with other schools and build new ones within the business community. The consortium is an example of how companies as diverse as Syngenta, VF Jeanswear, Xanofi and Digitaloptics can find mutual benefits in not only the high-end equipment it offers access to but also the intellectual capital of faculty and graduate students. The work isn’t without challenges, especially given recent budget cuts. UNCG has cut $85 million from its budget. The absence of salary increases has made it extremely challenging. Highly qualified staff and faculty, especially in research, are leaving because they can double their salaries in the private sector.
Powell: Education is an important part of the state’s economic-development brand and has been for many decades: the best community-college system, one of the best higher-educational systems. It has made the region and the state competitive and will continue to do so. That brand must be protected.
Phillips: Higher education is the goose that laid North Carolina’s golden egg. The business community’s commitment to education is something that needs to be renewed. It needs to make it clear that education matters and what is expected from Raleigh to maintain it.
Baker: Aerospace companies need customized training, and the ones in the Triad regularly use programs orchestrated by Guilford Tech, which has had a campus at the airport for 30 years. Honda Aircraft Co. needed a training program that dealt with manipulating carbon fiber into aircraft parts. The college is training people to do that. Every semester, graduates walk across the airfield and go to work for TIMCO Aviation Services Inc., Honda, Cessna Aircraft Co. or FedEx Corp. It’s imperative that the college keeps generating that workforce.
How do you recruit trained workers to the Triad?
Newkirk: Our firm struggles with that because it is competing with firms in Raleigh and Charlotte. The Triad is undersold. No one should believe that Charlotte and Raleigh are more exciting. There is a lot to do in the Triad for individuals and families along with economic opportunities. If you prefer the offerings in Winston-Salem or Greensboro, they are just a short drive away. That option is unavailable in regions dominated by a single city.
Hayes: I lived in Winston-Salem about 15 years ago and have since returned. The difference is incredible. On a Tuesday night, for example, there are people everywhere downtown, when it was deserted before. Organizations are doing a lot to attract and keep younger folks. There is more downtown living space. The region’s arts community means you don’t have to be in a large metropolitan area to enjoy those types of events. The UNC School of the Arts is a big part of that. It’s about living, working and finding a connection.
Brady: Many of UNCG’s employees live outside Greensboro. Many live in Winston-Salem or High Point, but some commute from as far as Danville, Va. There is a tendency to assume that the entire workforce lives in Greensboro. There is actually more movement back and forth within the Triad than you might expect, and that’s very healthy for the region.
Powell: There has been an out-migration of young professionals and college students because of the economic restructuring that’s occurred. There is a lot of talk about the importance of big companies, but the smaller companies — with fewer than 100 employees — make up most of the manufacturing base and jobs in the region. Most are privately held companies owned by people older than 60. In the next 10 years, those owners will be looking to sell their companies and retire. If succession-planning programs and flexible capital aren’t made available locally, many of those companies may leave. Piedmont Triad Partnership is focused on this need. The region has approximately 500 privately held companies, most generating between $2 million and $40 million per year in revenue. These companies are smaller than what the typical private-equity company is interested in, but their needs are larger than what an individual investor can do.
Newkirk: The entrepreneurial dynamic is crucial to this region’s future. The Triad has companies such as Wells Fargo, Dixon Hughes Goodman, Brooks Pierce, etc., that can advise business owners, help them keep the company here, cash out and enjoy their retirement years. If we don’t recognize that need, the owners are stuck with the stress of exiting their companies.
What role does the airport play in economic development?
Baker: We are the third-largest airport in the state but moving just a third of the flights and passengers as Charlotte Douglas International Airport. The airlines are only flying to their hubs, so you can’t go from one nonhub city to another without visiting a hub. That puts pricing pressure on smaller markets, which prompts folks to drive to other airports. It’s not something we control. We can control the experience. There is value in the simplicity of flying from Piedmont Triad. The airport has been pursuing low-cost carriers since about 1990. We’ve landed Frontier Airlines Inc., but it has limited service. Frontier does open up the West through its Denver hub, and that’s a plus. But community support is needed to make it successful.
Brady: University faculty are encouraged to use Frontier. Many higher-education meetings are held in Denver or Orlando, Fla., which Frontier serves. We are not in the frequent-flyer mode but are trying to contain travel costs given the budget cuts. The addition of low-cost flights
to those cities has been helpful.
Phillips: I recently flew to Santa Fe, N.M., and my best option was from Piedmont Triad. The Triad actually has three options for airports. I can get to Raleigh-Durham International Airport almost as fast as I can get to LaGuardia from midtown Manhattan. I also can go to Charlotte. I’ve been in and out of Piedmont Triad a fair amount lately, and it always offers a great experience.
Newkirk: Flying from Greensboro, I know parking is about 60 steps from my gate, and I can leave for the airport 30 minutes before my flight. That’s a big deal to me.
Lindsay: The airport has allowed Forsyth Medical Center to develop a cardiovascular-care partnership with Cleveland Clinic, so that companies that want to send employees there for cardiovascular care can come to us.
And it’s very important that an airport is close by because patients will be brought in from farther away.
What are some of the major benefits the Triad offers?
Powell: The infrastructure is here. It has colleges and universities. There is still wealth in the region. Professional services are available as well. It’s a desirable place where people want to live and work. It’s unlike some other parts of the country — there is population growth.
Baker: The roadways allow you to get anywhere in the region in 30 minutes: That’s what anybody who lives here will say. It’s a two-hour commute if you want to live in the country and work in New York City. The country here is minutes away, regardless of which city you want to get to. That’s a testament to the interstate system and arterial roads.
Phillips: That’s not just a benefit for residents but also for businesses. We’ve all seen the concentric circles on maps detailing how close we are to major East Coast markets. The Triad is a distribution center and poised to be more of one because of its location.
Lindsay: The region has world-class health care that can compete with any market in the country in terms of access, quality, patient satisfaction and experience. Novant is making significant investments in transforming its care from volume-based and reactive to a proactive community wellness and health approach. That work is going to put the Triad ahead of other regions in meeting those changes, which will help control costs.
How do you sell the region’s assets to new companies?
Phillips: Given the job losses and the move away from traditional industries, the focus is on what we’ve identified as clusters: aviation, life sciences, advanced manufacturing. We have a sense of what we are now, the assets we have and the story we can tell.
Lindsay: Winston-Salem has been deliberate about creating an identity around arts and innovation. That doesn’t just make the city a nice or more interesting place to live, it creates an environment that attracts businesses and grows and retains them.
Baker: The aircraft industry is a $156 billion industry and growing. We tell aviation companies that their competitors have already found an advantage here. And then you layer over top the education system that pumps out the employees they need. It’s a great place to live. The airport is not as congested as some others, which makes access easier. More companies will come — I’m convinced of it — but we need sites for them. We found some room on 1,000 acres on the other side of the airport but needed a bridge to carry a taxiway across a future alignment of Interstate 73 to access them. The N.C. Department of Transportation is moving forward on the project, selecting a contractor for the I-73 work who will also build the taxiway bridge. A third of the funding for the $300 million cost was found in 18 months. This is a 10-year plan, and I think it is ahead of schedule.
Powell: Even though the Pied-mont Triad Partnership has focused on regional marketing in the past — because it has been receiving state money — that will not be the priority moving forward. New economic-development engines have to be built to replace ones lost. I have a saying: The calf rarely brands itself. Brands are built on unique assets. The region has four distinctive cities. Winston-Salem needs to create its brand, as does Greensboro and Burlington. High Point has used furniture to create its brand. That’s the key to recognition.